SIXGF - Sixt SE falls after Deutsche Bank pulls bull rating

2023-07-14 06:47:44 ET

Deutsche Bank downgraded Sixt SE ( OTC:SIXGF ) to a Hold rating from a Buy rating on Friday on concerns over the near-term profitability track.

Analyst Michael Kuhn and his team still have the view that Sixt is probably the best managed company in the car rental industry, having left behind all competitors profitability-wise over the past decade. Sixt ( OTC:SIXGF ) was also noted to be the biggest winner of the COVID crisis, taking advantage of struggling competitors to accelerate its U.S expansion. However, the firm thinks profits will come down this year and does not expect major profit growth over the next two years.

"At the same time, important indicators for the car industry, like used car prices, show signs of intensifying weakness. Air fares have also shown signs of weakness as of late, and we have become more cautious on European airlines. Despite our forecast cuts, we still think the shares trade on relatively attractive valuation levels, but without positive earnings momentum and in the context of a worsening trading environment, we think it makes sense to move down to a Hold until the macro uncertainties resolve and until signs of earnings momentum improving again become tangible."

Deutsche Bank cut its price target on Sixt ( OTC:SIXGF ) to €125 from €160.

Shares of Sixt ( OTC:SIXGF ) fell 4.85% in Frankfurt trading on Friday.

Seeking Alpha analyst Daniel Dunaevski recently published a positive article on Sixt ( OTC:SIXGF ). He highlighted the international car rental company's strong margins due to a premium strategy and pricing power.

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